J&J to pay $2B, including $18 million to N.J., over how it marketed antipsychotic drug

BloombergJohnson & Johnson has agreed to pay more than $2 billion to settle criminal and civil allegations into its marketing of Risperdal.

Johnson & Johnson will pay more than $2.2 billion to resolve criminal and civil probes into the marketing of the antipsychotic drug Risperdal and other medicines in one of the largest U.S. health-care fraud cases.

J&J’s Janssen unit will plead guilty to a misdemeanor criminal charge over misbranding Risperdal for uses not approved by the Food and Drug Administration, including for elderly patients with dementia. Under the plea deal announced today, Janssen will pay a $334 million fine and forfeit $66 million.

Janssen also settled civil claims that it marketed Risperdal without approval for the elderly, children and mentally disabled, and that it paid kickbacks to physicians and to Omnicare Inc., the largest pharmacy for nursing homes. The civil accord covered off-label marketing of Risperdal, another antipsychotic, and Natrecor, a heart failure drug.

New Jersey will receive about $18 million as a result of the settlement.

“These companies lined their pockets at the expense of the American taxpayers, patients and the private insurance industry,” Attorney General Eric Holder said at a news conference in Washington. J&J “recklessly put at risk the health of some of the most vulnerable members of our society -- including young children, the elderly, and the disabled.”

“Today we reached closure on complex legal matters spanning almost a decade,” Michael Ullmann, J&J’s general counsel, said in a statement. “This resolution allows us to move forward and continue to focus on delivering innovative solutions that improve and enhance the health and well-being of patients around the world.”

Company Charges

J&J said the company had previously accrued the settlement amounts, and no other charge to earnings will be recorded.

“Janssen accepts accountability for the actions described in the misdemeanor plea,” according to the statement. “The settlement of the civil allegations is not an admission of any liability or wrongdoing, and the company expressly denies the government’s civil allegations.”

J&J, the world’s largest seller of health-care products, agreed to a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. It lets J&J recoup bonuses and other long-term incentives from workers engaged in “significant misconduct.”

The agreement is the government’s third-biggest with a pharmaceutical company, behind a $3 billion settlement that GlaxoSmithKline Plc reached last year over marketing of medicines, including Paxil, Avandia and Wellbutrin, and the $2.3 billion accord that Pfizer Inc. entered in 2009 over marketing of the painkiller Bextra and other drugs.

State Claims

J&J’s settlement doesn’t end Risperdal claims brought by several U.S. states, including Louisiana and South Carolina.

The civil settlement, which involves the Justice Department and 45 states, resolves several lawsuits filed by whistle- blowers under the False Claims, which lets citizens sue on behalf of the government and join in any settlement. The Justice Department joined those cases.

The U.S. government has been probing Risperdal sales practices since 2004, including allegations the company marketed the drug for unapproved uses.

J&J disclosed in August 2011 that it reached an agreement to settle a misdemeanor criminal charge related to Risperdal marketing.

U.S. and state investigators examined whether J&J improperly promoted the drug for treating elderly patients with dementia, a use never approved by regulators, and for children before the Food and Drug Administration first approved pediatric uses in 2006.

Approved Uses

While doctors may prescribe an approved drug for any reason, companies can market them only for purposes authorized by the FDA.

Risperdal has been linked to excessive weight gain and diabetes. The drug, once J&J’s biggest seller, generated worldwide sales of $24.2 billion from 2003 to 2010, reaching $4.5 billion in 2007. After that, J&J lost patent protection and sales declined.

The FDA approved Risperdal in 1993 for psychotic disorders including schizophrenia. That market is limited, and J&J’s Janssen unit sought to sell Risperdal for bipolar disorder, dementia, mood and anxiety disorders and other unapproved uses, according to court filings. The drug was later approved for other uses.

The Omnicare part of the settlement is $149 million, attorney Linda Wyetzner, who represents whistle-blower Bernard Lisitza. He is a former pharmacist for Omnicare who said he was fired after complaining about his employer’s switching patients’ prescriptions to J&J drugs.

“This case was about Johnson & Johnson using kickbacks to drive sales of their atypical antipsychotic drug to people in nursing homes,” she said. Wyetzner called the practice “outrageous.”